How Having a Culture Code Can Help You Scale Faster Than Ever Before

11/13/2017 12:39 pm ET
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A code of ethics is a set of principles designed to guide professionals to do business honestly and with integrity. This code outlines mission, values and ethical principles that employees must uphold while working for the company.

As more and more workers are remote (50% according to GlobalWorkplaceAnalytics.com’s 2017 findings) and technology continues to change the dynamic of work culture, it is vital for business owners and leaders to evaluate their ‘codes’ to reflect the way they feel business will be best executed.

For many business owners, they will say that being a cultural fit is key to building a successful company. "If we learned anything from the so-called 'best practices' of the Industrial Age, we learned that we need to hire people who genuinely care about the people they work with and for and not hire those who show up to work every day just to collect a paycheck," said Mark Babbitt, founder and CEO of YouTern, a company that helps interns with their futures. "Employers simply can’t take a chance on someone who won’t mesh well with the existing team, doesn’t share common goals with their colleagues, and are not aligned with the mission of the company."

Roman Kirsch, founder and CEO of Lesara, has expanded his company into 24 markets in less than four years and says the most important thing about company culture is just like any other business strategy – can it scale?

Quantifiable Metrics

Culture is often considered an X factor. You know it exists, but it’s hard to put into words, let alone numbers. But in today’s business environment, nearly everything needs to be backed up with data. That’s why Kirsch says the secret to cultural scalability is creating quantifiable metrics:

“Dating back to our very first hires back in 2013, they multiplied our mentality and culture through a make-things-happen attitude, thinking and doing big versus getting lost in small details. It was all about being bold in content but modest in style. However, multiplying ourselves and leading by example just didn't work when adding 15+ team members every single month. Especially when a lot of the new hires "import" the work ethics or culture from different companies. So we did what we thought a tech and data-driven company should be doing: quantifying culture and measuring what initiatives have the best ROI.”

These are three examples of quantifiable culture according to Kirsch:

a.) Recruiting Channel Performance: What are the best channels for different positions, what is the Cost per Hire and how much should this position be worth for us. If we can't find a Product Manager, for example, but having one would save us $50k in the next quarter, this is what we would be willing to invest to get one onboard.

b.) Funnel Management Optimization: Early on we decided that we would never compromise on hiring. So if you need to hire 15 new team members a month, then the only way to keep up the quality is to increase the number of applications. We figured for us that the ideal acceptance rate is 1%. Hence, we manage our funnel accordingly and keep investing into more applications if we need to bring in candidates for certain positions.

c.) Acceptance rates by Interview Step: Someone being too harsh in the interviews and having too few candidates coming into the next rounds? Or is your interviewer too lenient and letting too many applicants through? Looking and comparing acceptance rates by interviewer helps us making the recruiting process consistent, maintain excellent candidate quality and give dedicated interview trainings to recruiters who have too little/too high acceptance rates.”

Transparency

Transparency in the workplace is an ongoing quest to drive honest, consistent results. By having an open floor plan, an open door policy, and clear-cut KPIs that are shared throughout the company, you empower teams to achieve and overachieve.

"By broadcasting our KPIs, the growth is tangible, performance is measured, and the direction is clear," shares Kirsch. "We share all our goals (for example 100 Day Plans) company-wide, so it’s only natural to do the same thing with the KPIs and the results we achieve. By providing this level of transparency people are a.) more involved and b.) work is synced between departments. Everyone works for the same goals and can set their priorities accordingly."

Promotion and Hiring Structure

While studies show that external hires get paid more, they also receive significantly lower marks in performance reviews for their first two years on the job. External hires are also much more likely to get laid off than are those promoted from within.

To circumvent this, companies must define their company culture from early on and use the metrics in place to promote from within. Kirsch explains their recruiting process, which is known to be tough and diligent: only 1% of all applicants get hired – a rate that is more selective than Harvard.

"We prefer to use these metrics to promote from within. A lot of people who started as interns or entry-level team members are now heading huge departments and budgets. This led us to realize that our culture is one of our competitive advantages. We understood that to maintain this advantage as we grow, we must continue investing in it, and so the Culture Code was created."

As for companies looking to create a strong company culture, these are the guiding principles to focus on:

  • Don’t compromise on hiring
  • The first hires are crucial in getting the culture and trajectory of the company right
  • While culture and values may be different from business to business, you need to write them down, make them visible and share them to make them a core belief among all staff.
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